This Will End Well…. Affirm Offers Financing For Expensive Sneakers

Max Levchin’s new startup, Affirm, essentially offers to loan consumers money to pay for their purchases.

The Affirm website claims that the company aims “[to use] modern technology to re-imagine and re-build core components of financial infrastructure from the ground up… focusing on improving the lives of everyday consumers with less expensive, more transparent financial products,” but that all sounds rather impenetrable, as first noted by Zero Hedge.

Affirm offers easy consumer financing

Fortunately another section of the website tells that Affirm allows you to “pay over time for your most important purchases.” Obviously everyone’s definition of “most important” varies, but Affirm’s main purpose is to “connect directly with online stores” and loan consumers the money they need to buy items.

One surprising area into which the company is headed is premium footwear. Hypebeast writes of a partnership between Affirm and specialist sneaker store Flight Club, which will allow fans of expensive kicks to finance their purchase over the course of up to a year.

Prices for the rarest sneakers can reach thousands of dollars, putting them out of reach of some consumers. With Affirm. Flight Club allows those consumers to finance the sneakers of their dreams.

Selected picks include the “Fragment” Air Jordan 1 at $123.01 USD per month and the Nike Air MAG at $702.90. While many people will not be aware of the cachet attached to these shoes, they are very expensive indeed.

Could shoe-backed securities soon be traded on Wall Street?

Affirm offers financing for purchases of up to $10,000 on Flight Club, with options to pay over 3,6 or 12 months. Interest rates vary from 10-30% APR.

Other asset-backed security offerings from the likes of Springleaf and OneMain have proved successful, and supply of consumer loan-backed ABS is predicted to reach $30 billion this year. As a result it might not be too long before we see groups of sneaker loans put through Wall Street’s securitization machine and traded as securities.

Given the demand for high-priced sneakers, which inspire significant investment from people who might otherwise balk at spending such a large amount of money at one time, it seems that Affirm may be onto a winner with its partnership with Flight Club.

Since Converse is not rated by Affirm, maybe one of the rating agencies could help out a young entrepreneur who wants to build the next unicorn?

Author: Brendan ByrneWhile studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala.
To contact Brendan or give him an exclusive, please contact him at theflask@gmail.com